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Fiesta adds training units as part of growth strategy

Fiesta adds training units as part of growth strategy

Pollo Tropical, Taco Cabana parent plans labor development to keep pace with growth

Fiesta Restaurant Group Inc., parent to the Pollo Tropical and Taco Cabana brands, has added more units to its management-training stable to accommodate its biggest year of openings, executives said last week.

The Addison, Texas-based company plans to add 28 to 32 new locations this year, with the majority of those Pollo Tropical units, Tim Taft, Fiesta president and CEO, said Thursday in an earnings call with analysts. Fiesta currently has 338 units, with 167 Pollo Tropical restaurants and 171 Taco Cabana locations.

“We are adding more restaurants this year than ever before,” Taft said. “We have 17 restaurants under construction and expect to have all of 2015 restaurant openings under construction by summer.”

To support the growth, the company has more managers in training than ever, Taft said.

“We’ve added one training restaurant to each Texas market — Dallas, Houston and San Antonio — and are in the process of doubling the number of training restaurants in Texas in the short term,” he said.

This strategy would allow Fiesta to train future general managers and assistant general managers for both brands in their own markets instead of requiring them to travel to another city to complete their programs, Taft said. In addition, he suggested that managers could transfer across the two brands.

In addition, Taft explained, the management trainees “will be working in open restaurants for several weeks to gain additional experience before they begin managing their own restaurants, and will be closely mentored by their district manager. This will ensure that we operate at the highest level possible, and thereby provide a great guest experience from day one.”

The company is also working on mobile payment and ordering for the two fast-casual brands.

Fiesta has introduced Apple Pay at most of its restaurants and mobile ordering at some of its Pollo Tropical units.

“We’ve rolled out mobile ordering to almost 100 restaurants at Pollo and we’ll complete that by the end of June,” Lynn Schweinfurth, Fiesta’s chief financial officer, said.

The company will introduce online and mobile app ordering at Taco Cabana later this summer, Taft said.

The company is seeing a higher average check with mobile app orders, Schweinfurth said.

Fiesta Restaurant Group reported Thursday a net income increase of 20.4 percent in the first quarter ended March 29, with profit of $10.5 million, or 39 cents a share, rising from $8.7 million, or 33 cents a share, in the prior-year period. Revenue increased 12.7 percent, to $163.9 million.

First-quarter same-store sales at Pollo Tropical rose 6.4 percent, with an increase of 0.9 percent in traffic. Same-store sales at Taco Cabana rose 3.8 percent, with an increase of 0.7 percent in traffic.

Nicole Miller Regan, a senior research analyst with Piper Jaffray, noted that “we understand top-line momentum has continued” into the second quarter, with same-store sales trends at Pollo Tropical rising nearly 5 percent and increasing about 7 percent at Taco Cabana.

Lynne Collier, an analyst with Sterne Agee, wrote in a note that “we believe that FRGI represents one of the most compelling investment opportunities in the restaurant industry given a multi-decade growth opportunity, top-tier SSS and valuation (presently one standard deviation below its historical average).”

During the first quarter 2015, Fiesta opened six company Pollo Tropical restaurants in Florida, Georgia and Texas, and closed three company Taco Cabana restaurants in Texas.

As of March 29, Fiesta owned and operated 130 Pollo Tropical restaurants and 164 Taco Cabana restaurants, including two Cabana Grill restaurants. The company franchised 37 Pollo Tropical units in the United States and internationally, and seven Taco Cabana restaurants in the U.S.

Contact Ron Ruggless at [email protected].
Follow him on Twitter: @RonRuggless

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